Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Cautionary Note Regarding Forward-Looking Statements

We wish to caution our readers that this Quarterly Report on Form 10-Q and
certain information incorporated herein by reference contains forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and Section 27A of the Securities Act of
1933, as amended (the "Securities Act"). Forward-looking statements, which are
intended to speak only as of the date thereof, involve risks and uncertainties
that may cause our actual results, performance or achievements to be materially
different from any future performance or achievements expressed or implied by
these forward-looking statements. Factors that might cause actual events or
results to differ materially from those indicated by these forward-looking
statements may include matters such as future economic performance, general
economic conditions, consumer preferences and spending, costs, competition, new
product execution, restaurant openings or closings, operating margins, the
availability of acceptable real estate locations, the sufficiency of our cash
balances and cash generated from operating and financing activities for our
future liquidity and capital resource needs, growth of franchise and licensing,
the impact on our business as a result of Federal and/or State legislation
including, but not limited to, the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 and the rules promulgated thereunder, future litigation
and other matters, and are generally accompanied by words such as: "believes,"
"anticipates," "plans," "intends," "estimates," "predicts," "targets,"
"expects," "contemplates" and similar expressions that convey the uncertainty of
future events or outcomes. These risks and uncertainties include, but are not
limited to, the risk factors described in our annual report on Form 10-K for the
fiscal year ended December 31, 2013. We do not undertake any obligation to
update or revise any forward-looking statements to reflect events or
circumstances after the date of this report or to reflect the occurrence of
unanticipated events, except as may be required under applicable law.

General

This information should be read in conjunction with the consolidated financial
statements and the notes included in Item 1 of Part I of this Quarterly Report
on Form 10-Q and the audited consolidated financial statements and notes, and
Management's Discussion and Analysis of Financial Condition and Results of
Operations, contained in the Company's Form 10-K for the fiscal year ended
December 31, 2013 (the "2013 Form 10-K").

We operate on a 52- or 53-week fiscal year, which ends on the Tuesday closest to
December 31. The second quarters in fiscal years 2013 and 2014 ended on July 2,
2013 and July 1, 2014, respectively. Each quarter contained thirteen weeks. Our
current fiscal year ends on December 30, 2014 and consists of 52 weeks. Fiscal
year 2013 consisted of 52 weeks and ended on December 31, 2013.

As used in this report, the terms "company," "we," "our," or "us" refer to
Einstein Noah Restaurant Group, Inc. and its consolidated subsidiaries, taken as
a whole, unless the context otherwise indicates. The terms "fiscal quarter
ended," "fiscal quarter," or "quarter ended" refer to the entire fiscal quarter,
unless the context otherwise indicates.

Use of Non-GAAP Financial Information

In addition to the results reported in accordance with accounting principles
generally accepted in the United States of America ("GAAP") included in this
report, we have provided certain non-GAAP financial information, including
adjusted earnings before interest, taxes, depreciation and amortization,
management transition and related reorganization expenses, restructuring
expenses, strategic alternative expenses, write-off of debt issuance costs and
other operating expenses/income ("Adjusted EBITDA") and "Free Cash Flow," which
we define as net cash provided by operating activities less net cash used in
investing activities. Management believes that the presentation of this non-GAAP
financial information provides useful information to investors because this
information may allow investors to better evaluate our ongoing business
performance and certain components of our results. In addition, our Board of
Directors (the "Board") uses this non-GAAP financial information to evaluate the
performance of the company and its management team. This information should be
considered in addition to the results presented in accordance with GAAP, and
should not be considered a substitute for the GAAP results. Not all of the
aforementioned items defining Adjusted EBITDA occur in each reporting period,
but have been included in our definition based on historical activity. Our
definitions of these non-GAAP disclosures may differ from how others in our
industry may define them. We have reconciled the non-GAAP financial information
to the nearest GAAP measure on pages 17 and 24.

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We include in this report information on system-wide comparable store sales
percentages. System-wide comparable store sales percentages refer to changes in
sales of our restaurants, whether operated by the company or by franchisees and
licensees, in operation for six fiscal quarters including those restaurants
temporarily closed for an immaterial amount of time. Some of the reasons
restaurants may be temporarily closed include remodeling, road construction,
rebuilding related to site-specific catastrophes and natural disasters.
Franchise and license comparable store sales percentages are based on sales
of franchised and licensed restaurants, as reported by franchisees and
licensees. Management reviews the increase or decrease in comparable sales to
assess business trends. Comparable store sales exclude permanently closed
locations. When we intend to relocate a restaurant, we consider that restaurant
to be permanently closed on the date it ceases operations.

We use company-owned comparable store sales, franchise and license sales and the
resulting system-wide sales information internally in connection with restaurant
development decisions, planning, and budgeting analyses. We believe system-wide
comparable store sales information is useful in assessing consumer acceptance of
our brands; facilitates an understanding of our financial performance and the
overall direction and trends of sales and operating income; helps us evaluate
the effectiveness of our advertising and marketing initiatives; and provides
information that is relevant for comparison within the industry.

Comparable store sales percentages are non-GAAP financial measures, which should
not be considered in isolation or as a substitute for other measures of
performance prepared in accordance with GAAP, and may not be equivalent to
comparable store sales as defined or used by other companies. We do not record
franchise or license restaurant sales as revenues. However, royalty revenues are
calculated based on a percentage of franchise and license restaurant sales, as
reported by the franchisees or licensees.

Overview

We are the largest owner/operator, franchisor and licensor of bagel specialty
restaurants in the United States. As a leading fast-casual restaurant chain, our
restaurants specialize in high-quality foods for breakfast, lunch and afternoon
snacks in a bakery-café atmosphere with a neighborhood emphasis. Our product
offerings include fresh bagels and other bakery items baked on-site,
made-to-order breakfast and lunch sandwiches on a variety of bagels, breads or
wraps, gourmet soups and salads, assorted pastries, premium coffees, specialty
beverages and an assortment of snacks. Our manufacturing operations and network
of independent distributors deliver high-quality ingredients to our restaurants.

In the context of our key strategies to drive comparable store sales growth, to
manage corporate margins and to accelerate unit growth, we evaluated our
financial performance for the second quarter and/or year to date periods ended
July 1, 2014 by considering the following key factors:

 Comparable store sales - In the second quarter of 2014, we recorded a
system-wide comparable store sales increase of +1.6%, while company-owned
comparable store sales increased +0.9%. The increase in company-owned
comparable store sales was due to increased pricing, improved product mix
and reduced discounting, partially offset by a decrease in transactions.

 Catering/Coffee - Catering sales, which continue to be a strong revenue
driver, comprised approximately 10.0% of our company-owned restaurant
sales for the second quarter of 2014, with total catering sales increasing
by 17.3% from the second quarter of 2013. Coffee sales also remain strong
and total hot beverage sales represent approximately 9% of our comparable
company-owned stores sales on a year to date basis.

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 Unit development - We opened seven units in the second quarter of 2014. On
a year to date basis, we have opened 20 units compared to 18 units in
2013. A year to date summary of unit development activity is shown below:

 Manufacturing - Manufacturing sales remain robust and increased 11.1% from
the second quarter of 2013. Manufacturing gross margin increased to $1.8
million from $1.6 million, a 16.5% increase, as we saw a favorable shift
in sales mix and efficiencies in our manufacturing processes.

 Share Buy-back - On April 29, 2014, our Board approved a new share
buy-back program authorizing the Company to buy back up to $20 million of
its common stock from time to time in the open market or through privately
negotiated transactions. The new authorization has no expiration date, but
may be terminated by the Board at any time. The authorization does not
obligate us to buy back any particular amount of common stock and it may
be suspended or discontinued at any time. The amount and timing of any
buy-backs under the program will depend upon a number of factors,
including the price and availability of our shares, trading volume and
general market conditions. During the second quarter of 2014, we bought
back 111,408 of our outstanding shares. As of July 1, 2014, there is $18.3
million remaining under this program.

We expect that our catering channel will further benefit from new initiatives in
fiscal 2014 that include an enhanced call center, expanding search engine
marketing, utilization of sales coordinators in smaller markets, database
activation and operations execution.

We currently have a robust pipeline of existing franchise development agreements
and new license locations. As of July 24, 2014, we have 31 development
agreements in place for 223 total restaurants, 51 of which have already opened.
Based upon the development agreements, we expect the remaining 172 new
restaurants to open on various dates through 2024.

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Fiscal Year 2014 Guidelines

We are providing the following updated guidelines for the 2014 fiscal year,
which is a 52-week period ended December 30, 2014:

 75 to 85 system-wide openings;

 Capital expenditures of $30 million to $35 million;

 Cost of goods inflation of approximately 1% to 2%;

 Pre-opening expense of $65,000 to $75,000 per new company-owned restaurant;

 General and administrative expenses between $9.5 million and $10.5 million
per quarter;

 Interest expense of $4.25 to $4.75 million; and

 An estimated annual effective tax rate of approximately 39%; however, we
expect to only pay minimal cash taxes for the next several years.

Results of Operations for the Quarterly Periods ended July 2, 2013 and July 1,
2014

Financial Highlights for the Second Quarter 2014 as compared to the Second
Quarter 2013

 System-wide comparable store sales and company-owned comparable store
sales increased +1.6% and +0.9%, respectively, which we attribute to an
increase in pricing (which we took to offset inflation) and a shift in
sales mix, partially offset by a decline in transactions. We continue to
focus on stimulating comparable transactions at breakfast and lunch with
better taste and quality features, as well as innovative premium
sandwiches.

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 Our overall gross margin (excluding depreciation and amortization) for the
second quarter of 2014 was $22.2 million (19.8%), an increase of 0.7%, and
was driven by revenue growth partially offset by increased operating
expenses:

 Increased general and administrative expenses, primarily for increased
consulting fees, offset interest expense savings during the second quarter
of 2014.

 We incurred approximately $1.2 million in costs related to the departure
of certain members of management in the second quarter of 2014. These
costs primarily include severance costs, the accelerated vesting of equity
awards, external legal fees, retained search fees and other one-time
expenses related to these events.

 Net income decreased $0.8 million, or 23.6%, and Adjusted EBITDA decreased
$0.1 million, or 0.7%, from the second quarter of 2013.

 Earnings per share ("EPS") decreased to $0.14 per share on a dilutive
basis for the second quarter of 2014, compared to $0.19 per share on a
dilutive basis for the second quarter of 2013. Management transition and
related reorganization expenses impacted our EPS for the second quarter of
2014 by $0.04 per diluted share.

System-wide comparable store sales were +1.6% and +1.7% for the second quarter
and year to date periods ended July 1, 2014, respectively, which is primarily
attributable to an increase in pricing and a shift in sales mix, partially
offset by a decline in transactions. On a comparable basis, discounting at our
company-owned stores decreased $1.0 million when compared to the second quarter
of 2013, and decreased $1.3 million when compared to the first half of 2013.
While we are not discounting at past levels, management still believes that
discounting, along with new product development, plays a key role in driving
improvement in transaction trends.

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We opened two company-owned stores and five franchised locations in the second
quarter of 2014. We have opened 63 units system-wide since July 2, 2013. Sales
and purchases of restaurants to franchisees have resulted in net acquisitions of
two company-owned stores since July 2, 2013.

For the first half of 2014, we concentrated on re-investing in our core business
through store refurbishments in select markets, improved product quality and
increased advertising. While this reinvestment has had a negative impact on our
results, we believe that this negative impact will be short-term in nature and
should lead to significant long-term improvements.

We incurred approximately $1.2 million and $2.3 million in costs related
primarily to the departure of certain members of management during the second
quarter and year to date periods ended July 1, 2014, respectively. These costs
primarily include severance costs, the accelerated vesting of equity awards,
external legal fees, retained search fees and other one-time expenses related to
these events. These charges impacted our earnings per share for the second
quarter of 2014 by $0.04 per diluted share and by $0.08 per share for the year
to date period ended July 1, 2014.

Net income was $2.5 million for the second quarter of 2014, a decrease of $0.8
million, or 23.6%, from the second quarter of 2013, primarily due to the
management transition and related reorganization expenses.

Since July 2, 2013, we have opened ten new company-owned restaurants and closed
nine existing company-owned restaurants. We have also acquired two stores from
franchisees. We continue to focus on driving transactions at both breakfast and
lunch by using higher quality, better tasting ingredients, as well as offering
innovative premium sandwiches.

Company-owned restaurant sales for the second quarter of 2014 increased 3.2% due
to an increase in company-owned comparable store sales of +0.9%, incremental
sales from new, higher performing stores and a decrease in discounting. The
increase in comparable store sales is due to an increase in pricing (+1.6%), a
shift in product mix (+2.4%) and reduced discounting (+0.7%), partially offset
by a decrease in transactions (-3.8%).

Company-owned restaurant sales for the first half of 2014 increased 2.9% due to
an increase in company-owned comparable store sales of +1.3%, incremental sales
from new, higher performing stores and a decrease in discounting. The increase
in comparable store sales is due to an increase in pricing (+2.0%), a shift in
product mix (+2.2%) and reduced discounting (+0.8%), partially offset by a
decrease in transactions (-3.7%).

Total catering sales, which continue to be a strong revenue driver for us,
comprised approximately 10% of our product mix for both the second quarter and
first half of 2014, reflecting year over year increases in sales of 17.4% for
the second quarter of 2014 and 19.0% for the first half of 2014 as compared to
their respective 2013 periods. Our catering sales are fulfilled based upon
geographic proximity to the customer and the order backlog at a given restaurant
relative to other catering orders within a given market when the order is
placed. Coffee and hot beverage sales remain strong and represent approximately
9% of our comparable company-owned restaurant sales on a year to date basis.

Total costs for company-owned restaurants, as a percentage of company-owned
restaurant sales, increased 100 basis points in the second quarter and 120 basis
points on a year to date basis, primarily due to the initial ramp-up of new
stores, minimum wage increases and increased marketing spend.

As part of our ongoing effort to improve transaction trends, at the start of
fiscal 2014, we required our bakers to undergo a new training and certification
program. We also required our bagel bins to be fully stocked at all times. While
we believe that this will have a positive impact on transaction trends, our
waste costs have increased in fiscal 2014 when compared to fiscal 2013 as a
result of these initiatives.

As a percentage of company-owned restaurant sales, our food costs decreased 20
basis points for the second quarter of 2014 compared to the second quarter of
2013. As a percentage of company-owned restaurant sales, our food costs
. . .